Finance
The Insurance Regulatory and Development Authority of India (IRDAI) ordered SBI Life Insurance Company Ltd on Friday to take over Sahara India Life Insurance Company Ltd’s life insurance business.
SBI Life, which is publicly traded, would take over the policy liabilities of around two lakh Sahara India Life policies, backed by policyholder assets, with immediate effect, according to the IRDAI.
According to IRDAI, SBI Life is one of the country’s largest life insurers with solid financials.
It stated that a committee comprised of Member (Actuary), Member (Life), and Member (F&I) had been formed to expedite the implementation of the company transfer order.
“SBI Life has been directed to take adequate steps to reach out to the policyholders of SILIC (Sahara India Life), with regard to servicing of policies, including setting up of a dedicated cell to address the queries of the policyholders of SILIC, and also publish necessary details on their website,” the IRDAI said.
The IRDAI will also provide any appropriate instructions in the best interests of Sahara India Life policyholders.
In 2004, Sahara India Life was granted a Certificate of Registration to conduct life insurance business.
In 2017, the IRDAI appointed an Administrator to handle the insurer’s business due to certain major difficulties regarding the insurer’s financial propriety and governance.
The life insurer was also barred from underwriting new business.
Following that, the insurer was given additional instructions to meet the regulatory obligations.
Despite being given ample opportunities and time to achieve compliance, Sahara India Life failed to follow IRDAI’s instructions and take any affirmative steps to protect the interests of its policyholders.
Furthermore, Sahara India Life policy data shows that the company’s portfolio is demonstrating a run-off pattern. With increased losses and a higher percentage of claims to total premium, the financial condition has deteriorated.
If the current trend continues, the situation will deteriorate and lead to capital erosion, and Sahara India Life may be unable to satisfy its liabilities to policyholders, risking their interests, according to the IRDAI.
“After due consideration of all the facts and circumstances, the Authority (IRDAI) in its meeting held on 2nd June 2023 decided that action is warranted to protect the interest of the policyholders of SILIC,” IRDAI said.
“Accordingly, in exercise of its powers under sub-section (2) of Section 52B of the Insurance Act, 1938, the Authority decided to transfer the life insurance business of SILIC to another suitable life insurer with immediate effect,” the IRDAI said.
The IRDAI further stated that until further orders, the Sahara India Life shareholders’ investments would be under the authority and supervision of the Administrator.
Source:IANS
